What Are the 2015 Federal Estate and Gift Tax Filing Figures?

The Internal Revenue Service has recently announced that in 2015 the federal estate tax exemption will rise from $5,340,000.00 to $5,430,000.00 per person. (Under current law, this figure is adjusted annually for inflation.) Married couples can get the benefit of two exemptions, so in 2015 the total federal estate tax exemption per couple can be $10,860,000.00. The top estate tax rate on amounts above the exemption is 40%.

Under a new concept known as portability, the surviving spouse in some situations can use the unused exemption of the first spouse to die. Portability requires, in part, the timely filing of a federal estate tax return for the first spouse to die.

Few estates are expected to owe any federal estate tax in 2014, so the federal estate tax is no longer the biggest concern for many wealthy U.S. citizens who want to avoid taxes on wealth they leave behind to their heirs. The focus for many Massachusetts residents has changed to minimizing capital gains taxes and the Massachusetts estate tax, which begins at a taxable estate of $1,000,000.00, with a minimum tax of $33,200.00.

The Internal Revenue Service has also announced that in 2015 the annual gift exclusion will remain $14,000.00 per recipient. The provision sets the highest amount that an individual can give on an unreportable tax-free basis, without affecting the gift-giver’s federal estate tax exemption, to any person who isn’t the gift-giver’s spouse, or to an unlimited number of persons.

Transfers or gifts between spouses are usually tax-free, but not always. Whether the gift is tax-free is based on whether the spouse who is receiving the gift is a U.S. citizen. A spouse who is a U.S. citizen can receive unlimited gifts, but a spouse who is not a U.S. citizen will be limited to receiving $147,000.00 in 2015.

Gifts made in excess of the $14,000.00 or $147,000.00 rules require the filing of a federal gift tax return, and make use of part or all of the gift-giver’s federal estate tax exemption.